by Joseph Green
Not autonomy, but participation
Hierarchy, but no "fixed hierarchy"
A planned economy
Accounting money and the central bank
The law of social value
The balanced job complex
Relations between different parecon economies
Parecon in practice
Despite the many books and articles that Michael Albert and Robin Hahnel have written about parecon (participatory economics), they have left the basic structure of a parecon society unclear. The basic idea of parecon is supposed to be simple, that the workers themselves will run the economy and decide the matters that concern them. At this level of generality, almost all leftists would not only agree, but they would insist that it is a description of their own favored system for a future society. It certainly also describes Marxist communism.
Indeed, some commentators see nothing but this in parecon. And they interpret parecon as being whatever system they themselves have in mind. For example, the Trotskyists of the SWP of Britain see parecon as one of the systems which involve "a planned economy, where networks of democratically organized producers and consumers collectively control the world's resources". (1) In Amazon. Com's customer rating system, one reviewer of Albert's Parecon sees in it that "Governance by corporations and the state is replaced by democratic worker and neighborhood organizations. The market is replaced by participatory planning -- the creation of a comprehensive agenda for production by the direct input of requests for work and consumption outcomes by individuals and groups, and a back and forth process of negotiation. "
In order to assess whether parecon can really live up to these and other expectations, one has to have a picture of its overall structure. Does it really eliminate markets and government? Does it provide a model of how a planned economy can be produced without centralism? Does it show how self-governing councils are linked together in a consistent network in which everyone gets exactly the voice they deserve, no more, no less?
Below I outline and briefly comment on the main features of a parecon society, as far as I can
make them out. Some features of parecon, such as "balanced job complexes", are trumpeted in
parecon literature. Other features, such as accounting money, are left in obscurity. And some
others, such as the central bank, are bitterly denied, but are implied by how parecon is supposed
to operate. To dig the more obscure features out, I had to examine a number of Albert and
Hahnel's writings. I don't address here whether all these features of parecon are really compatible
with each other, but simply describe what they are.
Not autonomy, but participation
Most anarchist visions of the future stress that individual workers' councils or communities should be autonomous. Parecon, however, replaces the idea of autonomy with the idea of participation. It seeks to go beyond anarchist localism by recognizing the social connections between individuals and the interconnection of different sections of the economy. It holds that enterprises and councils and neighborhoods can't be autonomous, because their actions affect others, and others should therefore have some say about those actions. Individuals and councils, however, should have more say over decisions that affect mainly themselves, and less say over decisions that also affect others. Thus for parecon, the statement that one participates in decisions to the extent that they affect one isn't simply a flowery way of saying that the mass of people decide things. Instead it is supposed to indicate exactly who gets to decide what.
One might think that the parecon principle would lead to the idea that there are things that everyone should decide, and hence a role for centralism. But Albert and Hahnel believe that all centralism is necessarily bureaucratic, top-down, and oppressive. They claim that they have devised a system in which the common concerns of the whole society can be addressed in a uniform manner, but without centralism. A good deal of the complexity of parecon is based on trying to show how people can participate in taking decisions for the entire society, and how these decisions can be implemented, although there are supposedly no central institutions.
On the other hand, there are few decisions that only affect an individual. Almost anything one
does has some affect on other people. Indeed, there is no separation of private and social
concerns in parecon. There are only decisions with a greater or lesser amount of affect on other
people. Thus there are actually strict limits on what an individual can decide in parecon.
A parecon society has workers' councils at each workplace, and higher workers' councils to link them. Inside an enterprise, if it is of any size, there will be work teams and small councils, as well as the overall plant work council. There will also be a nested system of work councils, on up from the workplace, to industries, and so forth.
Parecon differs from anarcho-syndicalism in that it doesn't give trade unions or workers' councils
all power. Albert believes that the workers' councils should only decide matters that affect them
directly, that is, only workplace matters such as running enterprises, scheduling work, and
deciding who will be hired at each workplace.
A parecon society has neighborhood consumption councils to deal with non-workplace economic issues, such as people's consumption, the condition of the neighborhoods they live in, etc. Indeed, there is a whole nested system of consumption councils, from councils covering small regions, such as neighborhoods or even housing complexes, to councils covering large regions, such as cities or even countries. These councils play a role in the consumption side of the iterative process that sets the annual economic plan in a parecon society. They deal both with individual consumption and with schools, recreation facilities, parks, water systems, and so forth.
An important issue that is left unclear in the parecon plan is whether the neighborhood
consumption council has the right to judge who can take up residence in their area. This affects
the issue of whether inequality can arise between different neighborhoods, and whether certain
groups might face discrimination. For example, under parecon, one may apply to any enterprise
for a job, but it is the workers' councils at a plant who make the decision on who is hired.
Similarly, people at a housing collective probably have the right to decide who can live there. But
it is not clear whether neighborhoods have the right to judge who can take up residence.
As we have seen, some people think that parecon means replacing "governance by corporations and the state" by workers and neighborhood councils. This may imply that they see parecon as replacing government. But in fact, parecon preserves a state structure, which presumably is carried out by a third set of councils. Parecon claims to remove the economic functions of government, but keep government itself. In particular, it keeps the courts and police, but Albert says nothing about them in the book Parecon other than that they exist.
Under parecon, the governmental system is to exist forever. Parecon does not see it as a
temporary or transitional situation.
Hierarchy, but no "fixed hierarchy"
Albert says a lot against "corporate hierarchy" and "fixed hierarchy". Yet the system of workers and consumption councils is hierarchical. Lower councils appeal to higher councils, and the decisions of higher councils on those matters are binding on the lower councils. This is just the usual democratic hierarchy, but it is supposed to be something special when it is put into parecon colors.
Aside from the councils, various "facilitation boards", or groups of experts, play a major role in Albert's plan. For example, they help ensure that the planning processes actually result in a workable answer. They do everything from preparing information for people to examine as they make choices, to proposing overall societal plans for people to choose between in the final stages of the preparation of the annual parecon plan.
Thus, although Albert and Hahnel say a lot against hierarchy in general, in their more careful
statements they only write that parecon is supposed to abolish "fixed hierarchy". (2) The extra
word "fixed" is not simply a flourish. Parecon preserves hierarchy, but because everyone is
supposed to work a "balanced job complex" (see below), the hierarchy is not regarded as a "fixed
one". This is presumably also because the councils at the base include everyone, and many higher
councils are, presumably, elected. At the same time, parecon literature hides the extent of the
hierarchy and representative (rather than direct) democracy that is part of the parecon system.
Albert and Hahnel believe that parecon's complex systems of "iterative planning", as well as its
use of markets, mean that major decisions are not really made by higher councils, but through the
direct participation of everybody.
There are no unions in a parecon economy. Perhaps, however, Albert conceives of workers' councils as the form of unions under parecon? He doesn't say so. Yet this would require discussion, as historically worker councils and unions are not the same thing. Or perhaps he believes that the need for unions will fade away as a parecon economy takes root? He doesn't say so either. In his book Parecon, he passes over without mention the issue of unions under parecon.
One might expect that there would be a profusion of different types of workers' organizations during the transition from capitalism to workers' rule. After the achievement of a classless society too, one would expect that a profusion of organizations would concern themselves with workplace, professional and community interests. But parecon seems to have room only for the particular workers' councils and consumption councils given in the basic parecon plan. Workers' teams and councils are to manage the immediate workplace, with higher-level workers' councils linking groups of enterprises. According to parecon, these organizations suffice to ensure that workers participate in decisions precisely to the extent that the decisions affect them. Additional organizations would give various groups of workers additional influence. But in parecon, everyone is supposed to have exactly so much influence, no more, no less, so this might be taken as unbalancing the system.
At most, Albert mentions briefly that there might be "caucus meetings (to) discuss whether any
workplace issues affect minority group interests. Workplace caucuses have autonomous rights to
challenge arrangements they believe are sexually or racially oppressive. " But he says that he
won't go into the "justification" for this, as it lies outside parecon in "theories of kinship and
community relations". (3)
Albert claims that the issue of ownership under parecon is "trivially simply". Parecon "simply remove(s) ownership of the means of production as an economic consideration. Property in the form of means of production becomes a non-thing. . . . No one has any ownership of means of production that accrues to him or her any rights, any responsibilities, any wealth, or any income different from what the rest of the economy warrants for him or her. "(4)
But nothing in parecon is that simple. Parecon represents something of a compromise between anarchist autonomism and an economy of full social ownership, and this is reflected in the complexity of its structure.
Parecon eliminates the individual capitalist ownership, typical of the Western-style free-market economy, of factories and other large-scale means of production. In this respect, it goes beyond those market-socialist schemes which preserve capitalist companies and corporations as one sector of the economy. In parecon, the means of production are basically owned by all, except that an enterprise's staff has special rights over its own enterprise. The overall societal ownership is reflected in the enterprises having to run according to the overall social plan; they are subordinate both to the overall plan and to the higher-level councils; the formation of an enterprise must be approved by higher-level workers councils; and enterprises can be shut down by higher-level councils. Nor, presumably, can enterprise assets simply be transferred to another activity. As well, workers aren't paid by their workplaces, but by parecon society as a whole. (5)
Parecon does apparently allow individual ownership of some private possessions. But it's not clear what the extent of this is. For example, could anyone own an individual home? Or is everyone a renter?
Parecon also allows some private exchange between individuals outside the parecon societal plan or the control of workers' or consumers' councils. But Albert and Hahnel believe that this exchange will be negligible in size or significance. Among other things, parecon bans the use of money in such transactions (while preserving money for the official parecon economy).
However, the workers at an enterprise, its staff, have certain rights to their own workplace. They have the right to remain there indefinitely, unless they are dismissed for cause by their workmates, or the enterprise is shut down by a higher-level workers' council. (6) They decide who can join their workplace. As well, they not only determine local matters which are supposed to affect only themselves, but they propose what will be produced at the enterprise and what resources will be used. This depends in large part on the enterprise's own financial balance, which is kept separately from other enterprises. Albert to the contrary, all this gives the workers of a particular workplace special rights and responsibilities not shared by other members of society, and the extent and significance of these rights will be determined by the size and power of the enterprise, and its role in the economy.
Also, it is not clear whether any individual farming or artisan production can be part of the official parecon economy. An individual farmer, with a permanent right to the use of his field and his farm buildings and implements, would represent a certain individual ownership.
Thus there are several types of ownership rights of the means of production in parecon. There is
overall societal ownership of the economy. Alongside this, the individual enterprises have certain
rights over their own assets, and they maintain their own financial balances. And the staff of an
enterprise, although they can't simply appropriate enterprise assets for their individual use, have
certain rights over the enterprise. As long as the subordination of the enterprises to higher-level
councils or society as a whole doesn't degenerate into a mere formality, the staff's rights to the
workplace are limited. But there is a tug of war in parecon between the limited ownership rights
of the enterprise staff and the overall social ownership.
A planned economy
While parecon claims to be an alternative to centralism, in fact, a parecon society has many things decided uniformly for the whole economy. This includes the base wage rate, the pricing of commodities, the plan for what should be produced, etc. A general economic plan is drawn up each year which specifies the entire economic performance for the year, and which is modified during the year from time to time as needed. Even the annual consumption plan of each individual is part of this societal review.
Thus parecon is a system in which a single plan controls the overall decisions of the economy. This is in accord with the lack of autonomy of individual enterprises. They participate in formulating the annual plan, but they have to produce according to it. The workers' councils of an enterprise are the final say only in regard to those decisions that are not supposed to concern others, such as their specific work schedules, the layout of their workplace, etc. , but also including who they hire. Some of these things really don't concern others outside the enterprise, so long as they are carried out at all reasonably, while others, such as who they hire, may actually be of great concern to others.
The only way to get beyond capitalism is to replace marketplace forces with a planned economy. But not every planned economy either really gets beyond capitalism or is desirable. For one thing, parecon's planning system is very intrusive. For example, it doesn't just set how much an individual may consume, but it reviews the entire itemized list of everything an individual wants to obtain over the next year. This review is done mainly by one's neighbors, rather than some central authority, but that doesn't make it any less intrusive. In this and some other respects, such as its failure to distinguish between private and social concerns, parecon centralism goes beyond what is necessary for economic centralism. It is more all-embracing than the Marxist idea of central planning. And its pretense of being free of centralism and hierarchy makes its blind to the need for guarantees against bureaucratic abuses.
Yet Albert and Hahnel deny that there is a central plan, on the grounds that parecon doesn't have any "central planners". A large part of parecon's complexity arises from the attempt to achieve a central plan while imagining that it has been created in an entirely decentralized fashion. But even if the annual plan really were created in a decentralized way, it wouldn't change the fact that it is an overall societal plan, a central plan which governs the activity of every person and every enterprise in the society. Moreover, as we shall see, while everyone, and every council and enterprise, participates to some extent in working out the plan, there is a strong role for supervising "facilitation boards".
Under parecon, the annual economic plan is decided by a system of bidding in which everyone participates. This means that people and "units" (i. e. enterprises and councils of all types) mainly put forward what they propose to do, as opposed to expressing their views on general societal plans, and their proposals are reconciled by the balancing of "supply and demand". For example, each year everyone sets forward their plan for what they want to consume in the next year, as well as their plan for how long and hard they are willing to work. And every enterprise sets forth its proposal for what it will produce, and what resources it will need to fulfill this production plan. Neighborhood consumption councils, and any other "units" that are involved in economic activity, also make their proposal. As well, the consumption request of individuals are subject to the overview of the neighborhood consumer's council to which the person belongs. The resulting demand for goods, and supply of labor for producing goods, is compared. A check is made to see whether some things are oversupplied and other things undersupplied. And then, in light of this, everyone revises their plans, and prepares new bids and proposals, and goes through a new round of bidding, in an attempt to reach a balance.
And goes through this bidding process again, and again, and again, five times. Albert describes a five-step, iterative process in which this balancing of supply and demand takes place. At one time, Albert and Hahnel wrote that "specifying this procedure and analyzing its welfare theoretic properties" was their "most important contribution to developing a libertarian egalitarian economic vision. "(7)
This is a long, grueling process, even when there are no special controversies dividing people. As this iterative process proceeds, in order to have this process finally come to some conclusion, more and more restrictions are placed on how much each person or enterprise can change their proposal. "Facilitation boards" intervene in the iterative process at every step along the way, providing information, or restricting what changes can be made. Despite the important role of facilitation boards in this process, Albert insists that their role is only mechanical, and that the decision process is completely decentralized.
Finally, in order to bring the process to a halt, Albert suggests a major change. "The fifth iteration . . . might deploy still another rule . . . This time facilitation boards would extrapolate from the previous iterations to provide five different final plans that could be reached by the iterative process. . . . In this version, everyone affected would then vote, as units, for one of these five feasible plans. Each plan would be a viable consistent whole. "(8) This is the first time in the process that people and units would be faced with a "viable consistent" plan -- up to then, every "unit" was still simply bidding on what it itself was going to do. Thus individuals and councils and enterprises have participated in the plan, but they haven't until now been able to either put forward, debate on, or vote for some view on the overall nature of the economic plan. They have been restricted to bidding on what concerns them directly, their own activity. Now, finally, they may be presented with some overall plans to select from, and these plans come from "facilitation boards".
This is a planned economy, but whether it is a wisely-planned or democratically-planned economy is another question. It is "participatory planning" at its worse: everyone has some say on some little thing, but most people have almost no say on the big issues facing the economy and society.
As we have seen, parecon abolishes capitalist ownership of the means of production and seeks to have the economy run by all. In this sense, it is an attempt to envision a communist economy. But unlike communism, parecon sees markets and market exchange as eternal. While Albert and Hahnel denounce market socialism and claim that parecon doesn't have markets, they see buying and selling as eternal and, in fact, have their own version of markets. Thus, in reality, parecon seeks, not to replace markets, but to improve them by ensuring that sales take place at the proper price.
While the overall economic plan is decided for the parecon society as a whole, buying and selling apparently takes place through individuals and enterprises buying and selling what they need and what they have produced. But the buying and selling are supposed to take place at the prices set by the annual plan. Also goods are supposedly to go to where they are needed according to the annual plan. But it is not clear how this is achieved. Is it intended that the sales and purchases are individually specified by the all-inclusive annual plan, with regard to who buys what from whom as well as with regard to price? This doesn't seem to be what is intended. Or do individuals and enterprises buy and sell from whom they please on the market? But in that case, how is it assured that the transactions follow the annual parecon plan?
Parecon literature leaves such things vague. What is clear, however, is that parecon is based on the idea of preserving buying and selling, both directly through markets and indirectly. Much of the planning in parecon is designed to simulate the way in which markets use prices to balance supply and demand. This is discussed in more detail in the section "The reign of the law of value" in the other article on parecon in this issue of Communist Voice. .
However, Albert insists that parecon markets aren't really markets. He argues that buying and selling doesn't create a market. No, they are supposedly simply eternal methods that will be used in any complex society. According to Albert and Hahnel, if exchange takes place at the planned price and if there are no corporations, then it isn't a market. They are also convinced that if individuals do most of their shopping through group buying by neighborhood consumption councils, then it is surely isn't a market. In their view, a market must be exactly what exists in a western-market economy, and any interference with free-market fundamentalism converts the market into something else that shouldn't be called a market.
Similarly, Albert believes that despite the buying and selling, there is no market-style competition between enterprises in parecon. Yet it is said that any group of workers can submit, to higher-level workers' councils, their application to form their own enterprise. This presumably would mean in most cases that they are going to produce things of the same type as that already being produced by other enterprises. The goods of the enterprise will be put on the market along with the goods of the older enterprises. This would presumably involve a certain market competition between the enterprises over who buys their products. The losing enterprise faces closure.
The enterprises aren't just competing on the markets to see who could sell their goods. They are also competing over the "cost benefit ratio". This is another name for something like the rate of profit, but since parecon believes that its prices accurately reflect social costs and benefits, it believes that the profit reflects the contribution that an enterprise makes to society. Each enterprise must maintain a certain "cost benefit ratio", or else it may be closed down. This is promoted, in parecon, not as competition but as simply ensuring that the enterprises are efficient, and aren't wasting resources. But it is the usual marketplace method of competition among enterprises. And it assumes that the enterprises will not find ways to maximize their "cost benefit ratio" at the expense of other enterprises. For example, a workplace that hoards scarce materials will increase its own apparent efficiency, but at the expense of the economy as a whole. The motivating role given to the "cost benefit ratio" in judging enterprises leads to this type of abuse.
It might seem that in parecon, unlike capitalism, the workplaces aren't really competing: they are simply being judged against a number which represents their objective performance. But the profit margin of a capitalist firm is also determined by its own balance sheet, and not by a direct comparison to its competitors. In fact, the social benefits and costs attributed to a parecon firm are all based, albeit somewhat indirectly, on comparisons to other enterprises. The determination of "social costs" and "social benefits" under parecon, that is, of prices, includes considering the average experience of enterprises in making products, or of councils in using these products or cleaning up after them. So the evaluation of an enterprise on the basis of a numerical "cost benefit ratio" is, actually, a comparison between the enterprises. But it is not just any type of comparison. It is a comparison made in financial terms. And the losing enterprises will have to petition higher-level councils to avoid being shut down.
No doubt, it is useful and important to encourage efficiency and the elimination of waste. It is
also important for different workplaces to compare experience and spur each other on. But Albert
hides the fact that parecon aims to achieve this through a marketplace form of competition and a
financial measure of success.
Accounting money and the central bank
Parecon, having buying and selling, naturally also has money. It circulates from one part of the economy to another in great cycles. And its main planning seems to be done in financial terms.
However, it doesn't have cash. Although Albert doesn't seem to mention it in his book Parecon, the idea is that cash is replaced by "accounting money". Albert and Hahnel believe that this "accounting money" allows parecon to ensure that money is only used according to the annual plan and that it can be not be used for the black market. Accounting money is defined in one of their books as follows:
"Each individual has a 'dollar' income recorded in the economy's computer system. The income will be above or below average if the actor is borrowing or lending, or works more or less than average. When an individual or unit proposes receipt of some good, it spends 'accounting money' to get it. Every unit and individual can spend up to its income each year, each expenditure being deducted from its account. No cash changes hand, the computer record of remaining income merely decreases with each new expenditure. Likewise, accounting money does not earn interest. "(9)
Thus accounting money implies that the economy is centralized around what is, in effect, the parecon central bank. Buying and selling consists of changes in each individual's or unit's (such an enterprise, workplace, or territorial administrative unit) bank balance, but not in a physical exchange of cash. So it is as if all buying and selling were done by check or by credit card. Whatever Albert and Hahnel might imagine, such check and credit transactions are just as much real financial transactions as cash exchanges, and thus "accounting money" is just as real as paper dollars, metal coins, or hoards of gold and silver. "Accounting money" may replace paper money by computer entries, just as paper money replaced gold and silver with colored rectangular bits of paper, but this is not the abolition of money but a change in its form.
Albert and Hahnel would vehemently deny that accounting money is kept charge of by a bank. They would say that it kept track of by the "economy's computer system". The terms "bank" and "central bank" mean corporations and centralism to them, while the term "computer system" seems neutral and anonymous. But it doesn't make any difference economically whether there is a big building with a lot of paper ledgers in which financial accounts are kept, or a central computer system, in which financial accounts are kept. A bank is a bank is a bank.
Indeed, the parecon bank plays a central role in the parecon economy. For example, we have seen that the workers aren't paid by the enterprises. Their consumption allowance is discussed at the neighborhood consumption council, and approved through the annual parecon planning process. They receive a "credit card", presumably through their council, but this card is actually issued on the central bank. (10) Since the consumption councils have no independent source of funds, other than receiving the part of the consumption allowance of individuals that is earmarked for collective consumption, the funds for workers' consumption have to come from the central bank.
Meanwhile, the central bank collects funds from the enterprises. For example, the enterprises may not pay their workers, but they do pay for labor. Under parecon, "enterprises will end up getting charged according to the scarcity and productivity of different kinds of direct labor just like they will be charged according to the scarcity and productivity of land. NOTE: THAT HAS NOTHING TO DO WITH WHAT THE ACTUAL MASTER CARPENTER WILL BE PAID. " (capitals as in the original)(11) Parecon literature leaves it vague as to who is charging the enterprises. But clearly, the enterprises pay the central bank, which steps forward as the representative of parecon society as a whole.
Thus the enterprises pay the central bank, not their employees, while the central bank pays the
employees. One of the reasons for this roundabout method is so that the charge to the enterprises
can be different from the wages. Parecon seeks to have the enterprises economize on scarce
skilled labor by using the method of financial incentives and charging more for it. But it wants to
pay workers for "effort and sacrifice", not skill. In order to accomplish both simultaneously, it
needs a central institution. Because parecon is based on money, this central institution is the
The law of social value
Albert and Hahnel stress that parecon sets the proper price for each commodity, this price being the "social cost". Much of their complex system of planning is devoted to finding the true "social cost" of things. Buying and selling at the "social cost" is supposed to give parecon a vast superiority over outright market economies. But in essence, this means that parecon is ruled by what one might call (but they don't) the law of social value, while outright capitalist economies are ruled by the law of value. But the law of social value is nothing but the old law of value in new clothes.
The law of social value doesn't manifest itself only in outright buying and selling. The bidding system by which the annual parecon plan is prepared is a modified version of methods originally developed by other economists to simulate how a market sets prices. Since it simulates a market, it gives results similar to a market, even if the plan is implemented without any open buying or selling whatsoever. In this regard, whether it is simulated or actual buying or selling is only a difference in form, not essence.
Albert and Hahnel believe that buying and selling according to the "social cost" means that transactions will benefit all society. Albert writes that if individuals acts selfishly, simply for their own benefit, their economic transactions will nevertheless benefit everyone, provided they are carried out according to the proper "social costs". Thus Albert writes that "ironically, the claim made for markets--that pursuit of individual interests coincides with the social interest--actually holds for participatory planning. " Thus does Adam Smith's "invisible hand" of free-market economics make its appearance in a system that believes it has left capitalism far behind. This is supposed to ensure that "in a parecon, even antisocial people, if they want to get ahead, must do socially positive things. "(12)
So it may not be too surprising that, as has been mentioned above, in parecon the basic measure of the success of an enterprise is whether it achieves the proper level of profitability. Only it's not called profitability. Instead Albert says that enterprises "whose proposals have lower than average social benefit to social cost ratios are forced to increase their efforts or their efficiency. "(13) But what is the ratio of social benefit to social costs? In parecon, social benefits and social costs are measured by prices. Hence the cost benefit ratio of an enterprise's activity is something like the ratio of the income to the expense; it is a variant of the rate of profit.
Albert and Hahnel believe that if supply and demand, ecological concerns, efficiency, moral considerations, and personal preferences all participate in determining prices, then prices will be an adequate tool for planning to ensure the balancing of supply and demand, ecological improvement, efficient operation, moral principles, and the satisfaction of personal desires. Parecon requires that a single measure, the price, can accomplish all these things simultaneously. But no such single measure can do this. No matter how democratically prices are determined, no matter whether this is done by planning or by markets, by central planning or by participatory economics, by fiat or by consultation, prices cannot perform this role. It is an illusion of capitalist economics that a single measure, the price, can play such a role. When parecon embraces this illusion, it means that it subjects itself to the law of value. (14)
The balanced job complex
One of the characteristic features of parecon is that every worker is supposed to have a "balanced job complex" (BJC). This means that no one is supposed to work exclusively at mental labor or manual labor, but to combine jobs that have the societal-average amount of mental and manual labor. Similarly, the jobs are supposed to be balanced between administrative and non-administrative jobs, between prestigious and non-prestigious jobs, or even between jobs at important and hence influential workplaces, and jobs at minor workplaces.
Alert and Hahnel give examples that show that, to achieve a BJC, workers might split their work week between several or even half-a-dozen different jobs, and even between several workplaces. Note that this isn't a matter of having a number of different jobs over one's overall work life, but of working different jobs at the same time. The BJC is supposed to be balanced, not just over one's life or even over a year, but during every week of one's work life. Moreover, the process of balancing job complexes assumes that everyone has the same idea about which jobs are desirable, and which aren't, and which workplaces are desirable, and which aren't. It assumes that the same jobs are prestigious and influential in every society. These are some of the many practical difficulties that would stand in the way of implementing BJC's.
The intention is that BJC's would equalize everyone's conditions. However, even with BJC's, it would still be possible for a group of people to monopolize an influential or especially desirable workplace. While balancing work complexes may well require that many people work at several different workplaces simultaneously, it does not, in itself, mean that there isn't a stable and permanent workforce at any one enterprise. Once workers are accepted as part of the collective running a workplace, they have the right to stay there unless fired for cause (although they may also have to spend some of their time at other workplaces).
Parecon agrees with Marxist communism in that it opposes the rigid division of labor under capitalism. It differs from Marxist communism in how it seeks to solve this problem. Communism aims to eliminate the gulf between mental and manual labor, while parecon aims at balancing each individual's work time between mental and manual jobs. Communism envisions a variety of methods: it seeks to eliminate the divorce of education from practice; it seek to make knowledge and skill the property of the masses; it seeks to transform the nature of as many jobs as possible, integrating production with management, and practice with research; it seeks to eliminate the barriers to people shifting from one occupation to another; and it aims to increase the variety of possibilities open to the worker. Parecon accepts some of these goals, but it lays emphasis on its mechanical scheme of balancing one's work time between desirable and undesirable jobs.
Parecon sees the BJC as the guarantee that a parecon society couldn't become a state-capitalist society such as the Soviet Union. Albert and Hahnel don't see Stalinist economies as state-capitalism but as repulsive non-capitalist economies, so-called "coordinator economies". This is based on Albert and Hahnel's view that not the bourgeoisie, but the technical strata, or "coordinators", ruled in the Soviet Union. They see the "coordinators" as between the working class and the bourgeoisie in western capitalism, but as ruling state-capitalist economies. They believe that Stalinist society had overcome markets and capitalism and issues of ownership, and the only problem was that the division of labor still existed. They therefore don't see all the tasks necessary to ensure working class control over the economy. In their view, after overcoming the present-day corporations, all it takes to overcome class division is to combine jobs into balanced job complexes, and they don't see any preconditions for doing this other than accepting the BJC as a desirable moral value.
But in fact, the state-capitalist economies never transcended issues of ownership and markets.
Meanwhile the bulk of Soviet "coordinators" were not particularly well-paid or powerful.
Stalinist society was ruled instead by a new Soviet bourgeoisie, which owned the economy based
on its control of the ruling party and the state apparatus. While the later generations of the
higher-level Soviet bureaucrats may generally have had technical educations, it was their climb
through the bureaucracy that led them into the ruling class. The bulk of mental laborers and
people with technical educations, the bulk of engineers, scientists, educators, skilled workers,
doctors, etc. , were not in the ruling class.
Computers play a major role in parecon. They are needed to carry out the complex system of iterative bidding that which forms the core of parecon planning. Albert believes that computers will allow a parecon economy to carry out the intricate system of balancing supply and demand, balancing work complexes, and keeping track of everyone's expenditures, that are part of parecon. Computers are also essential to the replacement of cash by "accounting money". Moreover, Albert and Hahnel believe that computer-simulated markets aren't really markets, and hence won't be subject to the laws of capitalism.
They also see computers as essential for supplying each individual with the possibility of seeing everything going on in the economy, and thus supposedly participating in every decision. To some extent, parecon replaces the role of worker solidarity with the electronic connection through the computer terminal.
Marxist communism sees not computers in particular, but the development of large-scale
production in general--and of the modern working class which develops on the basis of
large-scale production--as material prerequisites for a planned economy. Computers have a mere
auxiliary role for the Marxist view of planning, which instead puts stress on such things as the
development of a proletarian workforce which becomes accustomed to the habit of working
together and of waging struggles in common.
Relations between different parecon economies
A parecon society is run, as we have seen, according to an overall plan. But it covers only a certain geographical region, and there might be another parecon society in another region. For example, two countries might each have parecon economies, but separate ones. In that case, each has their own economic plan, and one might be much richer than the other.
Such independent parecon societies would relate to one another through ordinary trade, that is, buying and selling. They "trade items with the valuations being that of either one country, or the other, or set by some agreed standard, or according to the international rate of exchange, for that matter. " Indeed, "a similar rule could exist for trade with non-parecons. " Thus the trade relations between parecon societies are similar to those between a parecon society and an ordinary capitalist country. In both cases, this is just ordinary buying and selling, and the only issue is how items are priced. The richer parecon society might agree to give favorable terms to a poorer one. (15)
Such trade does, however, pose a problem for the preparation of the parecon annual plan. After
all, it wouldn't be possible to include the trade partner in the five-step iterative process. To that
extent, the pricing in the annual economic plan would no longer be the "social cost" but
something else. This wouldn't necessary be a big problem, except that parecon sets great store on
setting accurate prices. And it's an issue that would arise as soon as the first attempts at a parecon
society were made. After all, if there really were a transition to parecon, it would occur first in
relatively small individual regions, for whom trade relations would be a major issue.
Parecon in practice
There has never been a society run on the basis of parecon. However, Albert believes that parecon principles can be put in practice piecemeal. He has, for example, tried without much success to give advice to the factory-takeover movement in Argentina. He doesn't ask them to establish accounting money or the complex five-step system of iterative planning. The entire method of establishing coordination between enterprises is thrown aside. In practice, he merely supports workers' councils and wants them to use wage scales according to parecon principles, to establish balanced work complexes, and to withdraw from hierarchical organizations. In their books and major articles, Albert and Hahnel don't discuss examples of how this has worked out in any organization. They rely instead on hypothetical examples of what should be done in the future, or examples of rank-and-file initiative that have little to do with the specific recommendations of parecon. <>
(1) Alex Callinicos, "Does this revolution go far enough?", Socialist Worker, 28 June 2003. This article criticizes George Monbiot, and contrasts Monbiot's program to Callinicos's own Anti-Capitalist Manifesto and Albert's Parecon. (Return to text)
(2) Albert and Hahnel often write against hierarchy in general. For example, they write "we simply ask if hierarchical production relations are consistent with the goals of a participatory, equitable economy.
. "The answer is 'no' for reasons that are obvious to most workers but apparently obscure to many economists. " (Chapter 1, "Traditional Economies", in The Political Economy of Participatory Economics, p. 20. This work is also available on-line at www.zmag.org/books/polper.htm.)
. But in fact, being unable to accomplish the impossible, it is only "fixed hierarchy" that they would abolish. Thus Robin Hahnel writes that "Neither delegation nor the division of labor are lost in a participatory economy. READ MY LIPS: An economy with(out) delegation of authority and division of labor is nonsense. We did not design and propose a piece of nonsense. There is a division of labor . . . We have also delegated authority. " ("Response to Criticisms of Parecon", capitals as in the original, available at www. zmag. org/ParEcon/writings/hahnelanswers. htm) (Text)
(3) Chapter 11. "Working", Parecon, p. 178. (Text)
(4) Chapter 4, "Ownership", Parecon, p. 89, 90. (Text)
(5) Workers' pay is determined by a basic wage rate set by an overall societal plan that is formulated each year, and modified by the assessment of workers by their workmates. This assessment is expressed through "a system of 'report cards', if you will, that members receive from their workers' councils [at the place of work] and bring to their consumption councils [neighborhood councils]. " (Albert and Hahnel, Chapter 3, "Consumption", The Political Economy of Participatory Economics, subsection "Equity, Incentives, and Efficiency", p. 52. ) In the course of formulating the annual societal plan, all individuals in the consumption council -- whether workers, retired, or disabled -- take part in making proposals about what they want to buy and how long they want to work. And finally, an individual receives their consumption allowance, or pay, by getting "a kind of credit card, that incorporates her plan, budget, and choices". This card is based on the resources of the society as a whole, but presumably comes through the neighborhood council. It seems to specify not just the amount of consumption, but what one is going to buy. But there is supposed to be some flexibility, as Albert assures us that it "allows regular updating in light of changes in her preferences and patterns". (Chapter 12, "Consuming", Parecon, p. 215. Thus workers' pay depends on their performance at the workplace, but the pay doesn't come from the enterprise. (Text)
(6) They may have to also do some work at other workplaces -- see the section on balanced job complexes. But they have the right that, if they wish to stay at any workplace that admitted them as a worker, this workplace will remain part of their balanced job complex. (Text)
(7) Chapter 4, "Allocation", The Political Economy of Participatory Economics, p. 57. The five-step process is described here, pp. 63-71, as well as in chapter 13 "Allocating" of Parecon.
. The process isn't any easier for planning an individual enterprise. Albert describes a seven-round method of preparing the annual plan for an individual publishing firm. (Chapter 11, "Working", Parecon, pp. 188-193. ) And this is the outline of an ordinary plan, where no specially difficult problems came up! The plan for an individual firm or council is prepared simultaneously with, and in coordination with, the preparation of the societal annual plan. However, unlike the system of national planning, overall proposals are considered right from the start. (Of course, these are overall proposals for the activity, not of the economy as a whole, but of the individual enterprise or council. ) After all, enterprises and councils have to submit proposals concerning their activity even during the first round of national planning, so they have to prepare these proposals from the very start of their own annual planning. However, everyone in the firm submits their own overall proposal concerning the firm's activity to the national planning process, and it isn't until the fourth round of enterprise planning that all the workers in the publishing firm combine their proposals "into one consistent" and unified proposal representing their common view. (Text)
(8) Ibid. (Text)
(9) See the "Glossary" in Albert and Hahnel, Looking Forward: Participatory Economics for the Twenty First Century, p. 151. While accounting money doesn't seem to be mentioned explicitly in the book Parecon, it is assumed when Albert expresses confidence that money cannot be used in private transactions outside the parecon plan -- outside the plan only barter is possible. If there were cash, it would be hard to see why it couldn't be used for private transactions. "Accounting money", however, could easily be restricted to authorized transactions.
. Of course, although Albert overlooks this possibility, an alternate form of cash, separate from the official parecon "accounting money", could arise to take care of the needs of the private market. It happens all the time in present-day society that alternate currencies develop. There is the use of cigarettes as money at times of extreme economic dislocation, such as in post-World War II Germany, or in jails, such as American jails (at least until cigarettes were banned, and maybe sometimes even after). There are the informal "credit" notes created to facilitate barter transactions in Argentina. But Albert ignores the fact that money isn't simply created by governmental fiat, but arises out an economic situation. It is remarkable how often anarchists, while believing themselves to be emancipated free-thinkers who have dispensed with hierarchy and the state, attribute the most fantastic powers to rules and regulations. If the parecon authorities ban cash, so Albert believes, cash cannot arise. Cash isn't supposed to arise out of the soil of marketplace exchange and barter, but simply out of the decree of the appropriate council or government body about whether there should be cash or "accounting money" or just barter. (Text)
(10) See footnote 5 on page 41 for the credit card. (Text)
(11) See about two pages from the end of "3. Planning, Facilitation Boards and Class Relations" in Questions and Answers: About Participatory Economics, prepared by John Krumm from posts by Michael Albert and Robin Hahnel, available at the official parecon site, www.parecon.org. (Text)
(12) Parecon, pp. 187-8, 159. (Text)
(13) Chapter 9: "Summary and Defense", Parecon, pp. 154 (Text)
(14) The three-part article in Communist Voice entitled "Labor money and socialist planning" explains why no single numerical scale, whether ordinary money, labor hours, or something else, can serve as an adequate economic measure for socialist economic planning. At most, such a single scale can have a subordinate and secondary use. The article shows that Marx and Engels held that the use of any such scale as the main guide for societal planning means subjecting that society to the law of value. See especially part two of this article, in Communist Voice #26, May 1, 2000, which gives some indication of what it means to plan without a single scale. It goes into the analysis of the cycle of production given by Marx in Volume II of Capital, in which Marx shows that the production of consumer goods and of means of production have to be balanced separately. And it goes into the Soviet method of "material balances" and the related Western method of input-output economics. While the Soviet and Western methods are not socialist planning, they do show that, even under state-capitalism and Western capitalism, serious planning has to prepare separate balances for different sectors of the economy. It cannot simply compare them according to a single index, whether that index is dollars or labor hours or, for that matter, parecon's "social cost". (Text)
(15) 5. "Trade and ParEcon" in Questions & Answers About Participa-tory Economies, Prepared
by John Krumm from forum posts by Michael Albert and Robin Hahnel, and available at
Last modified: October 16, 2003.